Why Estate Plans Fail

A common misperception about estate planning is that it is a “set it and forget it” activity. Often listed as a to-do on a long checklist of prudent adult responsibilities, creating a Will or naming guardians is a task that tends to be postponed year-to-year until something happens that causes you to visit an estate planning attorney. That’s as far as most people get — and that’s when (and how) estate plans begin to fail.

What most people don’t realize is that estate plans have an expiration date. The date is moveable, but its arrival is usually provoked by a “change” in circumstances.

Think about this: can you say you hold the same beliefs today as you did 5 or 10 years ago? Do you own the same assets as you did 5 or 10 years ago? Is your family situation the same as it was 5 or 10 years ago – that is, have you had any marriages, deaths, births, divorces, etc.?

In addition to changes to your personal and financial live, there have been numerous changes to the law in the last 10 years. And with the new estate tax law, there will be even more changes coming in the next couple of years.
The result of these changes is that a plan that was undoubtedly effective when it was created has grown stale, and like stale bread, the plan is no longer good for its original purpose. (Although it might still be okay for feeding the ducks.)

In my practice, I often see stale plans in the probate and estate administration cases we handle — encountering missing people, Wills that cannot be probated without hunting down witnesses, and financial strategies that made sense in the mid-90s, but which are simply unnecessary under today’s rules.

I’m sure you can think of similarities in your daily life, whether it’s periodic visits to the dentist, performing regular maintenance on a car or going to see a doctor early when there’s a problem. (My doctor likes to say, “Small problem, small solution. Big problem, big solution.”)

But the analogy I find most apt is that estate plans are like pianos. Immediately after tuning a piano, every key produces a perfect sound. Over time, though, the piano falls out of tune and requires attention to keep it from making all those unpleasant notes. Those of you who inherit old pianos know that the longer it’s been out of tune, the harder (and more expensive) it is to fix. The piano requires special skill, multiple visits and loving attention to correct those years of neglect.

The same goes for estate plans — but there is a solution that is simple: a system and a process for regular updates. That system needs to include scheduled meetings with your estate planning advisor that make it possible for you to alert your lawyer about changes to your personal or financial picture. It also needs to provide for regular updates from your lawyer about any changes in the law or new planning techniques.

As you probably know, we do this already with our YourLawyers4Life maintenance program. In January, we sent out a client update letter on the new estate tax law. In March and April, we will be meeting with our membership clients for our annual meeting. In September and October, it’s time to update the estate plans and provide the trustee training workshops that will provide you with peace of mind, and ensure your plan is carried out as you want it.

This updating, fine-tuning, maintenance — whatever you want to call it — is all part of making good on our promise to create plans that will succeed – today and in the future.

Posted by Victor Medina, Medina Law Group